Rosemont

Listings are important and we should pay attention to them. Why? Because they can help us understand the direction of property value. If listings are priced higher than the most recent sales, for example, the market is likely increasing. If they are priced lower, the market is probably declining or cooling off. If they are about the same, the market is likely more stable.

It’s been interesting to watch real estate unfold over the past couple of months in Sacramento. I’m beginning to see more graphs like the one above in Rosemont where listings are priced more consistently with the most recent sales. In many neighborhoods listings are still being marketed slightly higher than sales over the past quarter, but the gap between recent sales and current listings is definitely getting thinner as the market has been shifting lately. In light of an uptick in inventory, less cash sales and an increase in interest rates, this is understandable. Moreover, this year we may experience a bit more of a typical real estate season where the market cools off a bit as Summer fades away. This “cooling” didn’t happen last year at all since incredibly low rates drove competition just as investor cash (Blackstone and others) devoured the market from late Summer through the early Winter. Last year was definitely not “normal”. This year could be different. We shall see.

It’s one thing to hear about investors purchasing so many properties in Sacramento, but let’s see it. Even if you’ve only been following real estate casually, you’ve likely heard the private equity fund Blackstone has picked up well over 1000 properties in the Sacramento area since last August. No, that’s not a typo.

Let’s look at a few areas of Sacramento to visualize some of the neighborhoods where Blackstone has been most active. Each red label below represents a property that is owned by Blackstone. The bulk of these sales were purchased since last August, but there are still quite a few that have been owned for years.

Blackstone has been purchasing as “IH2 Property West” and “THR California”. They’ve had a strong presence in Natomas as you can see – especially in older Natomas. It is important to note the information above is based on Tax Records alone and could very easily not include MANY other purchases that did not end up listed in Tax Records.

There have also been quite a few purchases by Blackstone in Rancho Cordova. Most of the sales are in the 95670 zip code, while only a small amount have been located in the 95742 zip code.

There are also a decent number of Blackstone properties in Rosemont and a few sprinkled through College Glen and La Riviera. Neighborhoods that are ripe for first-time owners have typically been the primary target of this investment fund.

Last but not least, here are Blackstone-owned properties in South Sacramento. This market has been a very affordable area under $200,000, which has been a sought after target price for the investment fund. By the way, Deutsche Bank just gave Blackstone 1.5 billion in additional credit over the past week (on top of their initial 2.1 billion credit line to purchase properties). We’ll see if any of the money finds it’s way into the local market.

Video interview with Blackstone from Bloomberg (worth a watch):

Questions: How do these images stir you? Or what do they make you think of? If you are renting from THR / IH2, what has it been like to rent from them so far? Any stories to share?

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